California Demurrer — Business Torts

A contracting party cannot be sued for interfering with its own contract. Intentional interference with contractual relations is a tort against an outsider — a third party — who induces a breach by one of the contracting parties. The rule exists because the contract itself supplies the remedy when a party fails to perform, and converting every breach into a parallel tort claim against the breaching party would unravel the contract/tort distinction. The corollary rule for agents: an agent acting on behalf of a contracting principal is not a stranger and cannot interfere unless the agent acts outside the scope of agency or for personal benefit.

If you're the moving party: Identify the contracting parties on the face of the contract or pleading. If the named interferer is itself a party — or an agent acting within the scope of agency for a party — Applied Equipment bars the count as a matter of law. For agents alleged to be outside the scope, attack the absence of facts showing personal benefit or out-of-scope action; for parent companies alleged to interfere with a subsidiary's contract, run the Mintz v. Blue Cross analysis on whether the corporate-family relationship makes the parent a non-stranger.

If you're the opposing party: If the alleged interferer is genuinely a third party — an outside competitor, an unrelated entity, a person with no contractual relationship — plead that fact clearly. For agents, plead specific facts showing the agent acted outside the scope of agency or for personal benefit (a kickback, a competing business interest, a personal animus). For parent-subsidiary or affiliate relationships, plead facts distinguishing the interferer from the contracting party.

Primary source: Applied Equipment Corp. v. Litton Saudi Arabia Ltd. (1994) 7 Cal.4th 503, 514; PM Group, Inc. v. Stewart (2007) 154 Cal.App.4th 55, 65.

Unlike interference with an existing contract, interference with a prospective economic advantage requires the plaintiff to plead an independently wrongful act — conduct that is "wrongful by some legal measure other than the fact of the interference itself." Wrongful means proscribed by some constitutional, statutory, regulatory, common-law, or other determinable legal standard. The reason California requires this extra element: economic competition is favored, and protecting unrealized business expectations from ordinary competition would chill legitimate market activity. This is the competition-context framing under Della Penna / Korea Supply; for the employment-context framing (at-will employment / Reeves v. Hanlon), see the Cross-Complaint Interference page.

If you're the moving party: Identify the conduct alleged and run the Korea Supply test — is the conduct wrongful by some independent legal standard apart from the interference itself? Generic allegations of "aggressive competition," "soliciting plaintiff's customers," or "underbidding plaintiff" do not satisfy Della Penna / Korea Supply. Where the complaint identifies a specific independently wrongful act (defamation, breach of confidence, trade secret misappropriation, statutory violation), attack whether the underlying wrong is itself adequately pleaded.

If you're the opposing party: Identify the specific independently wrongful act and plead it with the specificity its underlying tort or statute requires. If the wrongful act is defamation, plead the Vogel/Okun specifics. If it is breach of confidence, plead the confidential relationship and the breach. If it is statutory violation, plead the statute and the conduct that violates it. The independently-wrongful-act pleading must rise to the level of stating that underlying claim.

Primary source: Della Penna v. Toyota Motor Sales, U.S.A., Inc. (1995) 11 Cal.4th 376, 393; Korea Supply Co. v. Lockheed Martin Corp. (2003) 29 Cal.4th 1134, 1158-1159.

An alter-ego allegation must plead facts supporting both prongs: (1) such a unity of interest and ownership between the entity and the individual or other entity that their separate personalities no longer exist, and (2) treating the entities as separate would sanction fraud or promote injustice. "Defendant A is the alter ego of Defendant B" is a legal conclusion. The unity-of-interest factors include commingling of funds and assets, treatment by the individual of corporate assets as his own, failure to maintain corporate records, undercapitalization, identity of directors and officers, and use of the same office or business location. The injustice prong requires more than a creditor going unpaid; it requires conduct that would render the result inequitable.

If you're the moving party: Quote the alter-ego allegations and identify the absence of unity-of-interest facts. Allegations that recite the legal conclusion ("Defendant Doe is the alter ego of Defendant Corp") without specific facts on commingling, undercapitalization, or identity of officers are vulnerable. Attack the injustice prong separately: the fact that the corporate defendant cannot pay a judgment is not, on its own, "injustice" within the meaning of Sonora Diamond — there must be conduct showing the corporate form is being used to evade obligations.

If you're the opposing party: Plead specific unity-of-interest facts: commingling (specific transactions, specific accounts), undercapitalization (the corporation was inadequately funded for its expected liabilities), identity of officers and directors (the same individuals controlled both entities), failure to maintain corporate formalities (no separate meetings, no separate records, no separate decision-making). Plead specific injustice facts: the corporate form was used to defraud creditors, evade contractual obligations, or shield wrongdoing. The pleading should give the court a factual basis to apply the Leek v. Cooper / Rutherford Holdings test.

Primary source: Leek v. Cooper (2011) 194 Cal.App.4th 399, 415; Rutherford Holdings, LLC v. Plaza Del Rey (2014) 223 Cal.App.4th 221, 235-236; Sonora Diamond Corp. v. Superior Court (2000) 83 Cal.App.4th 523, 538.

California does not recognize civil conspiracy as an independent cause of action. Conspiracy is a doctrine that imposes liability on persons who, while not actually committing the underlying tort themselves, share with the immediate tortfeasor a common plan or design in its commission. The plaintiff must plead and prove (1) formation and operation of a conspiracy, (2) the wrongful conduct in furtherance of it, and (3) damages. There must be an underlying tort that is itself actionable; the conspiracy claim cannot survive the failure of the underlying tort. The agent's immunity rule under Doctors' Company further narrows conspiracy claims: agents and employees acting within the scope of employment cannot conspire with their corporate principal in tort.

If you're the moving party: Identify the underlying tort and attack it. If the underlying tort fails on demurrer (insufficient facts, insufficient pleading specificity, statute of limitations), the conspiracy count fails with it as a matter of law. For agent-principal conspiracy allegations, run the Doctors' Company analysis: scope of employment, on the principal's behalf, no personal benefit. Where the conspiracy count is pled as a standalone count without a viable underlying tort, attack the count on its face under Applied Equipment.

If you're the opposing party: Plead the underlying tort with the specificity that tort requires. Plead the conspiracy elements: formation (when, who agreed), operation (overt acts in furtherance), damages. For agent-principal allegations, plead facts showing the agent acted outside the scope of employment or for personal benefit — Doctors' Company immunity applies only to agents acting within scope.

Primary source: Applied Equipment Corp. v. Litton Saudi Arabia Ltd. (1994) 7 Cal.4th 503, 510-511; Doctors' Co. v. Superior Court (1989) 49 Cal.3d 39, 44.

An aiding-and-abetting claim against a defendant who did not commit the underlying tort directly requires the plaintiff to plead (1) actual knowledge by the aider of the primary tortfeasor's wrongful conduct and (2) substantial assistance or encouragement to the primary tortfeasor in committing the wrongful act. "Should have known" is not enough; constructive knowledge does not satisfy the actual-knowledge prong. The doctrine exists to extend tort liability to facilitators of intentional misconduct without sweeping in mere transactional counterparties.

If you're the moving party: Attack the count at the knowledge prong: which facts pleaded show the defendant actually knew the underlying conduct was wrongful? Allegations that the defendant "knew or should have known" or "was aware of" without specific facts on the source of knowledge are vulnerable. For banks, accountants, lawyers, and other service providers, attack any allegation that their routine commercial transactions or services rendered to the primary tortfeasor amount to "substantial assistance" — under Casey v. U.S. Bank, ordinary banking and professional services do not qualify.

If you're the opposing party: Plead facts showing actual knowledge — specific communications, specific documents, specific acknowledgments by the aider that they knew the primary tortfeasor's conduct was wrongful. Plead facts showing substantial assistance — actions beyond ordinary commercial transactions that were necessary or material to the primary tortfeasor's wrongdoing. The pleading must give the court something more than the legal conclusion.

Primary source: Casey v. U.S. Bank National Association (2005) 127 Cal.App.4th 1138, 1145-1146; Schulz v. Neovi Data Corp. (2007) 152 Cal.App.4th 86, 93-94.

Since Proposition 64 (2004), a private plaintiff bringing a Bus. & Prof. Code § 17200 claim must plead facts showing (1) injury in fact and (2) loss of money or property as a result of the unfair competition. The reason: Prop 64 was passed to eliminate the prior "shakedown" practice of UCL claims by plaintiffs with no actual stake in the dispute. The injury must be concrete and particularized — generalized grievance about a marketplace practice is not enough — and the causal nexus must be alleged with facts, not labels. Kwikset clarified that economic injury is satisfied by a showing that the plaintiff would not have purchased a product but for a misrepresentation, but the pleading still must allege the misrepresentation and the resulting purchase decision.

If you're the moving party: Quote the standing allegation and identify what is missing. UCL counts that allege "defendant engaged in unlawful, unfair, or fraudulent practices in the marketplace" without alleging how the plaintiff lost money or property are vulnerable on the standing prong. For consumer-deception cases, attack the specificity of the misrepresentation-and-purchase causation: did the plaintiff actually rely, and would the plaintiff actually have not purchased?

If you're the opposing party: Plead the economic injury with specifics — the amount lost, the transaction at issue, the temporal connection to the unfair practice. For consumer-deception cases, plead the specific misrepresentation, the plaintiff's specific reliance, and the resulting purchase decision (Kwikset's "would not have purchased but for" standard). Generic "injury and damages" allegations cannot survive Prop 64 standing. See also ca-dem-ucl-prop64-standing for the fuller UCL-specific treatment.

Primary source: Bus. & Prof. Code § 17204; Kwikset Corp. v. Superior Court (2011) 51 Cal.4th 310, 322-323; Hall v. Time Inc. (2008) 158 Cal.App.4th 847, 853-855.

The California Uniform Trade Secrets Act (Civ. Code § 3426 et seq.) preempts common-law tort claims — conversion, unjust enrichment, breach of confidence, interference, UCL "unlawful" prong — when the underlying misconduct is the misappropriation of information that meets the statutory definition of trade secret, OR when the underlying misconduct is the misappropriation of confidential information that does not rise to trade-secret status. California courts have applied the preemption broadly: if the gravamen of the common-law count is misappropriation of confidential business information, CUTSA is the only available cause of action.

If you're the moving party: Identify the gravamen of each common-law count. Where the underlying conduct is misappropriation of confidential information — even if the information does not rise to trade-secret status — attack the count under K.C. Multimedia / Silvaco. Quote the complaint's own allegations to show the conduct alleged is misappropriation of information; ask the court to find preemption as a matter of law and dismiss the parallel common-law counts.

If you're the opposing party: Identify the independent factual basis — apart from misappropriation of information — that supports each common-law count. If the conversion count rests on physical property, plead the physical property conversion separately from any information-misappropriation allegation. If the UCL count rests on conduct other than misappropriation, plead that conduct distinctly. Where every count rests on the same misappropriation, consider whether to consolidate to the CUTSA count alone rather than absorb a preemption sustain.

Primary source: Civ. Code § 3426 et seq.; Civ. Code § 3426.7, subd. (b); K.C. Multimedia, Inc. v. Bank of America Technology & Operations, Inc. (2009) 171 Cal.App.4th 939, 957-962; Silvaco Data Systems v. Intel Corp. (2010) 184 Cal.App.4th 210, 236-239.

Negligent interference with prospective economic advantage requires the plaintiff to plead a duty of care running from the defendant to the plaintiff, applying the J'Aire / Biakanja multi-factor analysis: (1) extent to which the transaction was intended to affect the plaintiff, (2) foreseeability of harm, (3) degree of certainty that plaintiff suffered injury, (4) closeness of connection between defendant's conduct and the injury, (5) moral blame, and (6) policy of preventing future harm. The duty analysis is the gating issue.

If you're the moving party: Run the six-factor test against the complaint's allegations. The first factor is usually the cleanest attack: was the alleged transaction "intended to affect" the plaintiff specifically, or was it a general commercial transaction that incidentally affected the plaintiff's prospects? Where the transaction was not specifically intended to benefit the plaintiff, the duty fails as a matter of law. Generic "foreseeability of harm" allegations without facts supporting the J'Aire close-connection and moral-blame factors are vulnerable.

If you're the opposing party: Plead facts on each of the six factors. The first factor is the highest hurdle: identify how the alleged transaction was specifically intended to affect the plaintiff (a contract for the plaintiff's benefit; a transaction in which the plaintiff was a known third-party beneficiary; a service relationship in which the plaintiff was the foreseeable end-user). Where the transaction was a general commercial dealing not specifically directed at the plaintiff, negligent interference may not be available regardless of factual development.

Primary source: J'Aire Corp. v. Gregory (1979) 24 Cal.3d 799, 804-805; Lange v. TIG Insurance Co. (1998) 68 Cal.App.4th 1179, 1186-1187; North American Chemical Co. v. Superior Court (1997) 59 Cal.App.4th 764, 786.

Whether intentional interference with contractual relations lies for an at-will employment relationship — or whether the correct claim is IIPEA requiring an independently wrongful act.

Reeves v. Hanlon (2004) holds that intentional interference with contractual relations does not lie for at-will employment: there is no contract to interfere with because the relationship is terminable by either party at will. The correct claim is intentional interference with prospective economic advantage (IIPEA), which under Korea Supply requires an independently wrongful act — conduct that is wrongful by some legal measure other than its effect on the plaintiff's relationships.

If you're the moving party: Show the employment relationships at issue are at-will (California's default). The interference-with-contract count fails categorically. If the plaintiff/cross-complainant recasts as IIPEA, the independently-wrongful-act requirement is a further bar unless a specific predicate wrong is pleaded — the mere fact that the defendant induced terminations is not itself independently wrongful.

If you're the opposing party: If the employment relationship had a for-cause termination provision, plead it specifically — then interference-with-contract lies and Reeves does not apply. Otherwise, accept the IIPEA frame and identify the independently wrongful act with precision: the specific fraud, defamation, breach of fiduciary duty, or statutory violation that makes the defendant's conduct unlawful apart from its effect on the employment relationships.

Primary sources: Reeves v. Hanlon (2004) 33 Cal.4th 1140, 1152–1153; Korea Supply Co. v. Lockheed Martin Corp. (2003) 29 Cal.4th 1134, 1158–1159.

Corpus signal: moderate — Martinez v. Damich (LA Superior, Mosk Dept 34, May 7, 2026) sustained interference-with-contract count on Reeves grounds; breach-of-duty-of-loyalty count overruled in the same ruling.

Even when correctly pled as intentional interference with prospective economic advantage (as opposed to contractual relations), IIPEA requires that defendant's conduct was independently wrongful — i.e., wrongful by some legal measure other than the interference itself. This is Korea Supply's requirement: the defendant must have committed an act that is unlawful or privileged independently of its effect on the plaintiff's economic relationship.

If you're the moving party: Show that the complaint's only allegation of wrongfulness is that the defendant intentionally induced the termination or disruption of the economic relationship. If the only thing that makes the conduct wrongful is that it was directed at harming the plaintiff's relationships — not that it violated any independent legal standard — the claim fails.

If you're the opposing party: Identify the independently wrongful act with specificity: the fraud, the defamation, the violation of a specific statute or regulation, or the breach of a fiduciary duty that made the defendant's conduct wrongful apart from its effect on the plaintiff's economic relationships. The more specific the predicate wrong, the more durable the pleading.

Primary source: Korea Supply Co. v. Lockheed Martin Corp. (2003) 29 Cal.4th 1134, 1158-1159.